If you would have told me in March that I would be sitting at my kitchen table writing a blog post about 2021 marketing budgets in August, I might have invested in a comfier office chair sooner. Many of the decisions we made personally and as marketers in the days and weeks following the declaration of a pandemic were made with limited information. As an agency, we focused on how to adapt our own day-to-day operations and plans, while helping our clients shift theirs. As time has gone by, and we start to understand more the potential long-term impacts this crisis could have, we are still adapting. However, now is the opportunity — not to be reactive — but to continue to invest in the future. 44% of CMOs reported midyear budget cuts in 2020. Most of these cuts focused on the short-term need to free up cash flow. This included cutting in-person events, media buys, and contract staff. Many of us were optimistic the economic impact of COVID-19 would be short lived and spending would rebound quickly. Given the immediacy and unexpectedness of the budget changes, there was likely less consideration of the long-term impact of certain adjustments. While we are still facing uncertainty, most CMOs are optimistic about spending in 2021. As we set our sights on next year already, there is an opportunity to plan for flexibility in a way which will maximize our impact in 2021. How can we accomplish that? Here are five considerations to make as you plan your 2021 marketing budget. [bctt tweet="“As we set our sights on next year already, there is an opportunity to plan for flexibility in a way which will maximize our impact in 2021.” — Alexis Hall @Alexis5484" username="toprank"]
#1 - Speed Up Your Planning Cycle
You already know that you’ll need to be flexible as you approach your 2021 budget planning. Let’s be frank, it’s unlikely that a “set and forget” 2021 annual plan will be successful as we continue to face uncertainty and rapid change within the market. Planning is still critical, but instead our attention needs to be on how to speed up your planning cycle. The more quickly you are able to analyze and adjust the implementation of your plan, the more you will be able to successfully navigate impending changes.How to Speed Up Your Planning Cycle
- Create an annual plan. Go ahead and create those high level targets for your marketing budget and outcomes, as well as your tactical plan. Setting these targets will help you continue to pace toward your long term goals and always create a feedback mechanism regarding the success of your plan.
- Set up quarterly and monthly reviews. Determine now what metrics you’ll analyze on a monthly and quarterly basis. Focus on leading indicators, for example a reduction in web traffic may be a leading indicator of a decrease in leads. If a leading indicator is not meeting a goal, then you have the opportunity to adjust your tactical plan.
- Speed up time to market. Very large campaigns, which take months of up front investment of time, resources and budget dollars, may not be most practical right now. You can still plan a large scale campaign, but smaller units enable you to get into the market as soon as possible. This can help you gauge audience response, analyze, and adjust as needed and drive impact now.
#2 - Focus on ROI
An emphasis on understanding and driving tactical planning based on return on investment has been a priority for CMOs for a while now, but in 2021 it will be more imperative than ever. Line items which are unproven when it comes to driving revenue and margin, are most likely to be cut. It is critical to show the outcome of marketing as a department, but also understand the impact of individual line items.How to Hone In on ROI
- Invest in analytics. To understand ROI you must invest in the tools to track outcomes, as well as the talent to manage it. Tracking back to revenue can be complex, especially if you, like many organizations, are facing a lot of disparate systems that don’t necessarily speak to each other. Create a plan which will move you closer to that end outcome.
- Drive your team to value efficiency metrics. With the right analytics and planning sessions in place, you can drive your team to analyze and adjust tactics which will drive the highest return.
#3 - Understand Your Priorities
Whether or not you’re optimistic about spending in 2021, it’s important to be prepared for adjustments to your marketing budget midyear. 2020 midyear budget adjustments forced many marketers to prioritize short-term cash flow and what could be easily paused. In 2021, be prepared to adjust budgets based on impact. It’s critical to understand which marketing activities are essential versus those that you could afford to decrease.How to Understand Your Priorities:
- Determine what makes certain activities more critical than others. ROI is definitely important here, but not the only lens. Other things to evaluate are how important that activity is for growth, creating part of your differentiation strategy or is it critical to reduce risk.
- Evaluate and force rank. Creating a system to really understand which activities are most important to driving impact will set you up to adjust based on what is most important to you. You may decide this is a helpful exercise to review quarterly.
- Create contingency budgets. These back-up budgets will help you understand exactly how you would adjust based on either increases or decreases to your budget.
#4 - Invest in Your Brand for the Long Term
Short-term budget cuts can often have the unfortunate result of a reduction in brand visibility and communications, which are critical during an economic downturn. As you plan ahead for 2021, creating a plan which emphasizes maintaining or increasing saturation of communication from your brand will increase trust and keep you top of mind for customers and prospects as a critical resource. This strategy can result in an increased share of voice that will help maintain strength now, and create an advantageous position during recovery.How to Invest In Your Brand for the Long Term:
- Invest in organic. Increasing activities which contribute to organic brand mentions and placements, like influencer marketing or SEO, can help build your visibility across search and social media, growing your community and contributing to a footprint which can self sustain. This is a good long term investment. In fact, the 2020 State of B2B Influencer Marketing Research Report found that 90% of influencer marketing budgets are expected to increase or stay the same.
- Don’t slash your media spend. Organic and paid tactics work best when both are running together. If you make big changes to your paid investment, expect an impact to your brand visibility.
#5 - Position for Recovery
After most recessions, consumer behavior returns to normal within a year or two. But the deeper and longer the recession is, the more likely it is to have a lasting impact on consumer behavior. Brands that are positioning to service their customers now and later are more likely to create brand loyalty and come out ahead during the recovery phase.How to Position for Recovery:
- Understand your best customers. Now is a great time to partner with your customer data team in order to understand more about what makes an ideal customer (i.e. who is mostly likely to be loyal, spend more money and refer your brand to their friends). If budgets are changing, shift your efforts to acquiring more of these types of customers. Also, keep those customers happy and engaged.
- Examine your markets. When faced with budget cuts, brands are more likely to invest in existing markets, but now may be the time a new market is opening up to you. Keep your eye out for new opportunities.
Planning to Change Plans
During times of market uncertainty, we’re faced with the unique challenge of needing to be flexible, but not short sighted. It may be tempting to throw out those annual marketing budgets this year, but resist the urge to give into uncertainty. By understanding how and when you will adjust your plan, you’ll equip yourself to make decisions which will maximize impact.The post Planning for Change: How to Set Your 2021 Marketing Budget appeared first on Online Marketing Blog - TopRank®.
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